How to choose a business solicitor when it all goes wrong

A claim or a statutory demand arrives in the post, or a long-overdue payment from a delinquent client does not. You decide you need a litigation solicitor quickly – what should you do?

How people normally chose a dispute resolution solicitor

Overwhelmingly people turn first to the solicitor who helped them buy their house, or the solicitor who drew up their shareholders agreement or advised on their commercial lease. In other words, a solicitor they already know and trust.

There’s a problem with this. I trust my plumber, but I wouldn’t ask him to fix my electrics. For the same reasons, a solicitor who carries out transactional work is very unlikely to be able to properly advise on litigation and dispute resolution.

Alternatively, you may instead go to someone else you trust and ask them to recommend to you a solicitor who can help you resolve a commercial dispute. Either way there are some questions you should ask before instructing a solicitor so you know they’re the right person for the job.

“Have they done this before? How often?”

Why you ask these questions:

Neils Bhor, a Noble Prize winner, once said that “an expert is a person who has found out by his own painful experience all the mistakes that one can make in a very narrow field.” It’s better for you and your business if your solicitor has already had their own painful experiences before they take on your case.

Litigation and dispute resolution requires detailed knowledge of Civil Procedure, costs rules, Pre-Action Protocols and the true meaning and effect of a letter written ‘Without Prejudice’

If they are taking on work that is outside their realm of expertise it will take them longer. If you are paying by the hour you will be paying more for their lack of experience.

“Are you able to quote a fixed fee, or a no-win-no-fee for the work I want?”

Why you ask this question:

Litigation is always uncertain. Solicitors offer advice and can’t guarantee a successful outcome. However, if the solicitors’ remuneration is not related in some way to the outcome they achieve for you, then it may be the case that they are not confident in their advice.

One of the most distressing parts of litigation is that the costs can escalate beyond the original estimate and the consumer can feel that they have little or no control over those costs. For this reason negotiating a fixed or capped fee will remove an important element of uncertainty. After all, the person most able to estimate and control your costs is your solicitor and it is they that can best mange that risk.

The best way to bring a claim is with a solicitor acting on a no-win-no-fee agreement, and with the benefit of insurance against losing and being ordered to pay the other side’s costs (this is called After The Event insurance or ATE insurance). This way of litigating is commonplace in personal injury claims, but few businesses realise that no-win-no-fee agreements are commonplace during large commercial litigation in the High Court.

What is your estimate of irrecoverable costs? Is your hourly rate in line with the guideline rates published by the court?

Why you ask these questions:

Solicitors may well estimate their cost for recovering, say, £20,000 will be, say, £12,000

They will also tell you that if you win the court will order your opponent to pay your costs

What may not be clear to you is that usually, in the County Court, a successful claimant will recover around 75% of their costs if their solicitors’ hourly rates are in line with the court rates. If they are not, you may recover a significantly lower percentage.

Why does this matter? Let’s say you are attempting to claim £20,000, and your opponent makes an offer to settle by paying £15,000 plus your costs at a very early stage. If you accept that offer then you will be about £5,000 short of the amount you are owed. However, if you expend the risk and effort of going to trial for the full amount and you win, then you may very well end up £5,000 short anyway because of the irrecoverable costs i.e. the 25% to 30% that the court does not order your opponent to pay!

There is often an expectation that a litigation solicitor is an ‘attack dog’; a brilliant and terrifying legal expert that you instruct to savage your opponent, that they are someone with the ability to grind your opponent into the dust. Although that kind of thinking may be appropriate in exceptional cases they are very rare, and that way of thinking should only be adopted if all other routes have been exhausted.

Trying to resolve a dispute by collaborating and problem solving is now enshrined in the Pre-Action Protocols. Courts encourage parties to try mediation before asking a Judge to decide the issue at trial.

If your proposed solicitor is hostile to mediation and other forms of alternative dispute resolution, you should not instruct them.